Capellas Hums Quick-Turnaround Tune at WorldCom

The process is likely to include the sale or elimination of some underperforming businesses like Digex, the Web hosting and services unit, was well as paging business Skytel, say people inside and outside the company.

The Hour of Chaos

Capellas will also have to decide how much staff and resources to allocate to various parts of the company, including, for example, the MCI Neighborhood program. The wildly successful flat-rate, unlimited calling plan for local and long distance service hinges on government-mandated wholesale pricing. The regional Bells are heavily lobbying Washington officials to have the rules lifted, complaining that the prices don't cover the costs.

While analysts and consultants all agree that Capellas is a very capable executive, there are concerns that he may lack the deep background in telecom necessary to keep all the moving parts churning in the same direction.

One thing is certain: While WorldCom has appeared to weather its failure in good shape, the damage of insolvency continues to mount, putting a premium on a quick turnaround. The company has been able to keep many more of its lucrative corporate customers than many observers anticipated, but as more of those contracts come up for renewal, there is a strong chance of customer defections.

"As these renewals pop up, the best they can hope to do is retain their customer base," says adviser Hyman. "That makes for a greater sense of urgency to finish the restructuring process."

That urgency is being felt both by WorldCom and its rivals.

---

Check out my new and improved The Tech Edge newsletter. The new Tech Edge provides you with exclusive access to my investigative reports each week as well as real-time portfolio picks from Jordan Kahn, CFA, a new contributor to my newsletter. Click here for a 14-day free trial.